Vaudt: State budget hides spending, uses "Band-Aid approach"

The state's budget calls for spending $370 million more than it receives, provides a poor example of transparency and creates challenges for the future, Iowa Auditor David Vaudt said today.

"[Our] appetite to spend is much greater than the revenue we have," Vaudt said. "It doesn't seem to make much sense."

Gov. Chet Culver and legislators shifted $443.7 million in general fund spending into other funds and special accounts, Vaudt said, allowing them to "get around our statutory expenditure limitation because that limitation only applies to our general fund budget."

However, the general fund expenditure shifts that are released to the public are not an accurate picture of actual spending, he said.

Final budget numbers released to the public indicate a spending reduction of 4.2 percent from the governor's proposed budget, Vaudt said.

The numbers are "like looking at your checking account and ignoring your charge cards," he said.

Add in the state's "charge card" figures alongside the "checking account" figures, and the reduction of the proposed budget, compared to the actual adopted budget, drops to 0.4 percent -- 3.8 percentage points less than what the public is being told.

"We're very vulnerable to what the economy might do to us," Vaudt said. "We need to get back in line."

Vaudt said that although lawmakers claimed to spend $266.6 million less than Culver proposed, that figure dwindles to $25.3 million after "record-breaking" spending shifts are included.

Growth in spending outpaced increases in revenues by nearly 52 percent, Vaudt said, noting that state income has increased nearly 10 percent over a two-year period.

The budget "maxes out" funds that have been used in recent years to balance the budget, Vaudt said, and it creates concerns for what the auditor called "Iowa's new charge cards:" the Rebuild Iowa Infrastructure Fund and a new statewide sales tax.

Rebuild Iowa will receive $193 million from the general fund in fiscal 2009 and 2010, Vaudt said. He noted that money earmarked for other special funds has been channeled back to the general fund. He also expressed concern that sales tax revenue targeted for schools could be diverted to pay for general fund expenses.

In all, the budget, which takes effect July 1, creates $569.3 million spending gap, which lawmakers will have to address next year, Vaudt said.

Wellmark breaks ground for new headquarters

About 200 invited business and government leaders joined Wellmark Blue Cross and Blue Shield officials in a groundbreaking ceremony this morning for the company's new corporate headquarters near Western Gateway Park. The five-story, 550,000-square-foot building, scheduled for completion in late 2010, will be

the first corporate-owned headquarters for Wellmark, which has leased space downtown throughout its 70-year history. The $194 million project is located on a 6.5-acre tract bordered by Grand Avenue and High Street, stretching from 11th to 14th streets, and will be the first in Des Moines to be built to Gold Leadership in Energy and Environmental Design standards. Wellmark had considered building the headquarters on property it purchased in West Des Moines, but chose to remain downtown, largely due to efforts by city officials, Wellmark Chairman and CEO John Forsyth said.

"This is a significant step in our mission to provide quality products in all we do," Forsyth told the attendees, who included Gov. Chet Culver, Congressman Leonard Boswell, several state legislators and a number of other elected officials. "With a new building, you can build around your processes." Forsyth said the building's cost won't be built into its rates, and that the company expects to be able to reduce its administrative costs as a result of greater efficiencies with the new building. He said Wellmark's board has challenged the company to reduce its average annual rate increases to the level of increases in the Consumer Price Index within the next five years.

Culver said the project represents an example of a public-private, bipartisan effort to work together to improve Greater Des Moines. "Without this approach, without this teamwork, that wouldn't be possible," he said. In November the state's economic development board awarded $1 million in incentives for the project.

Groundbreaking attendees were the first to view an animated, three-dimensional rendering of the building's exterior, which "flies" viewers around the building.

This week in the Business Record: Interior designer starts her own business

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Ticker Orders for durable goods, excluding automobiles and airplanes, unexpectedly rose in April, signaling that demand from abroad may be helping factories ride out the housing-led economic slowdown, the U.S. Commerce Department said today. Excluding transportation orders, which tend to be volatile, bookings for goods meant to last several years rose 2.5 percent, the most since July. Today's figures indicate growth in Europe and emerging markets, along with a slide in the dollar, are helping sustain demand for American-made goods even as U.S. consumers rein in spending, Bloomberg said. The Iowa Concern Hotline is collecting information from people who want to donate goods or services to help victims of tornadoes that struck Sunday. To have items included on a list of donated goods, call (800) 447-1985. The information will be compiled in a database that will be used to direct items where they are needed. Please note that the Iowa Concern Hotline is gathering information only. It asks that people do not attempt deliver items to storm damaged areas. Hy-Vee Inc. Executive Vice President Ken Waller has been elected chief administrative officer by the company's board of directors. His sreas of responsibility will include human resources, risk management, safety and security, special projects and customer service initiatives. The 37-year Hy-Vee veteran also will take a lead role in developing the format of the company's recently announced smaller-store concept, the first of which will be built in Lincoln, Neb. Since 2000, Waller has been a top operations officer of the company, overseeing 112 stores in the company's Eastern Region He serves on the company's executive committee and has been a member of the board of directors since 2001. Unity HealthCare and Iowa Health System have announced an agreement for Trinity Regional Health System, the Quad-Cities-based affiliate of Iowa Health System, to provide interim management services for Unity HealthCare. Under the terms of the six-month agreement, Trinity will provide management support and consulting services to Unity's senior leadership team that will encompass strategic planning, billing and collections, overall financial operations and regulatory compliance objectives. In addition, Trinity and Iowa Health System will help Unity HealthCare in its leadership recruitment process. The agreement was effective Tuesday. Edward R. Maahs has been designated as the interim CEO at Unity HealthCare. Maahs most recently served as interim CEO for Mercy Medical Center-Des Moines and Mercy Medical Center-North Iowa, overseeing hospitals in Cresco and Lake City as well as Oakland, Neb. Prior to that, he worked as a consultant and interim administrator at various health systems in Iowa. Aviva USA, part of Aviva plc, the fifth-largest insurance company in the world, said it is now the top-ranked seller of fixed indexed annuities and life insurance in the United States. The company has been the top seller of fixed indexed life insurance for the past seven years and for the first quarter of 2008 took over the top spot in fixed indexed annuities, according to AnnuitySpecs.com. Meta Financial Group Inc. has announced that it will pay a cash dividend of 13 cents per share for the third fiscal quarter of 2008. The dividend will be payable on or about July 1 to shareholders of record as of June 16. On March 31, Meta Financial Group had assets of $810.5 million and shareholders' equity of $52.9 million. The Belin Quartet, in association with the Civic Music Association, will continue its summer concert series at 12:15 p.m. Friday in Nollen Plaza. In the event of inclement weather, the concert will take place at the Kirkwood Hotel lobby, 400 Walnut St. For the latest business news visit http://www.businessrecord.com.

LOCAL NEWS compiled by the news staff of WHO-TV 13.

WHO Top Stories

• The National Weather Service said the tornado that struck Sunday in Parkersburg rated a 5 on the Enhanced Fujita Scale, with winds up to 205 mph, making it the worst tornado in Iowa since 1976.

• The state's mobile disaster recovery center will open today in Parkersburg. A phone bank will be set up for residents to register for federal disaster aid. President George Bush declared Butler County a disaster area Tuesday, freeing up federal funds. Gov. Chet Culver is asking for federal assistance for three more counties: Black Hawk, Buchanan and Delaware. All four counties affected by the storm are receiving state disaster aid.

• Two former University of Iowa football players have been charged with sexual abuse following a seven-month investigation. Cedric Everson is sought on an arrest warrant for second-degree sexual abuse. Abe Satterfield is wanted on a warrant charging second- and third-degree sexual abuse. The charges stem from an alleged assault Oct. 14, 2007, at a university residence hall. Johnson County prosecutors said they expect Satterfield and Everson to turn themselves in to out-of-state authorities. They will be extradited to Iowa.

WHO Weather Forecast

Expect showers early today, then a mix of clouds and sun and a high of 66. Storms will develop overnight with a low of 52. Thursday will bring more showers and storms and a high of 71.